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2015 (1) TMI 1396 - ITAT CHENNAIDisallowance of depreciation on Sivaganga Beverage Division - Depreciation has been disallowed in the assessment years under consideration on the ground that the facts in the assessment years 2005-06 and 2006-07 were quite different from the assessment year under appeal - Held that:- A perusal of the records show that the facts in the present case are in no way different from the facts in the earlier assessment years. After trial run, plant is ready for commercial production. The assessee is waiting consent from the Pollution Control Board, to operate the beverage plant commercially. As decided in assessee's own case in order to get depreciation u/s.32, it is not necessary that the machinery in question should have been actually used in the relevant previous year for the purpose of business and it is sufficient if the same is kept ready for use during the relevant previous year, though not actually used due to circumstances beyond the assessee’s control. Allowing of depreciation on Modakurichi Sugar Project, Modakaurichi Cogen Project and Sivaganga Cogen Project on the ground that the assets were used for trial run - Held that:- The assessee cannot be denied the benefit of depreciation on the ground that the machinery was used for the very short duration for the trial run. It has not been disputed by the Revenue that trial run production was immediately followed by the commercial production. The Hon’ble Punjab & Haryana High Court in the case of CIT v. Piccadily Agro Industries Ltd. [2007 (8) TMI 327 - PUNJAB AND HARYANA HIGH COURT] has held that machinery used in trial run production would be entitled to depreciation. Rental receipts being treated as ‘business income’ - Held that:- A perusal of the records show that the assessee has been receiving rental income from letting out of commercial/business assets. Substantial part of rental income ₹ 33,11,438/- is received from letting out of staff quarters and the remaining rental income is from commercial buildings like industrial shed, corporate office etc. It is a trite law, that any income from exploiting commercial/business asset is a business income. This view is fortified by the judgments rendered in the case of CIT vs. VST Motors P. Ltd. [1996 (7) TMI 96 - MADRAS HIGH COURT]. Board Circular No.10/14/66-IT(AI) dated 12/12/1966 makes copiously clear that the staff quarters are business assets. This takes use to irrefutable conclusion that income arising from letting out of staff quarters is a ‘business income’. - decided against revenue
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